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Stock Market Dives Nearly 1000 Points, Fear of Greek Debt Crisis Spreading




In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points on worries about the spreading European debt crisis before paring those losses in an equally rapid rebound.

The apparent trigger for the massive selloff, which began shortly after 2 pm ET, was the approval of austerity measures by the Greek Parliament, which sparked renewed rioting in Athens.

“There is simply a growing recognition that Greece has got to default,” banking analyst Dick Bove told CNBC.com. “The riots in the streets showed the decision to repay the debt was not going to be made by the people in Germany, France and Switzerland—it’s going to be made by people in Greece and they’re not going to repay it.”

There also is a growing sense that any collapse of Greece could trigger a wave of defaults across Europe and even the world.

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Problems with Greek debt are about to spread to other countries and could infect the US unless the nation tackles its own mounting problems, Pimco’s Mohamed El-Erian told CNBC.

Riots erupted in Greece again on Thursday night to protest austerity measures.

About an hour or so after El-Erian spoke, global stocks sold off sharply with major US averages shedding more than 3 percent.

Speaking as Greek austerity measures won enough votes to be approved by parliament, El-Erian offered a stern warning about the potential of the crisis to escalate into something resembling, though not duplicating, the 2008-09 financial crisis.

“We’ve seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global,” said El-Erian, CEO of the world’s biggest bond fund.

He said the debt is a “transmission mechanism to go from country to region to global. So we should take this very seriously.”
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